- The CFPB just found fresh evidence of redlining, which has been illegal for over half a century.
- It found housing discrimination that prevented minority neighborhoods from receiving financial services.
- The Biden administration has taken other steps to increase homeownership for Black Americans.
- See more stories on Insider's business page.
Redlining, or housing discrimination by denying services to minority neighborhoods, has been illegal for over half a century. But it just keeps happening.
An agency within President Joe Biden's administration just found evidence of the discriminatory practice still happening today.
The Consumer Financial Protection Bureau, which ensures consumers are financially protected, released a report on Tuesday that found evidence of lenders violating the Fair Housing Act of 1968, which banned housing discrimination. Specifically, examiners in the bureau found lenders engaged in practices that discouraged prospective applicants in minority communities from applying for credit and targeted marketing in majority-white neighborhoods.
The agency's press release detailed that lenders located their offices in "almost exclusively" majority-white neighborhoods, only used pictures of white people in marketing campaigns, and published loan officer headshots of "almost exclusively" white people.
Initial analysis by the bureau found that one lender received significantly fewer applications from majority-minority and high-minority neighborhoods relative to other lenders, prompting a redlining examination that revealed lender prioritization of white neighborhoods. The bureau said the lender plans to undergo corrective actions regarding this violation.
The examination also "identified emails among mortgage loan officers containing racist and derogatory content," according to the report.
The term "redlining" dates back to the New Deal. President Franklin Delano Roosevelt's Home Owners' Loan Act and the National Housing Act of the 1930s had the goals of making homeownership more affordable, but when determining which neighborhoods would get guaranteed mortgages, the Home Owners Loan Corporation denied Black people access to mortgage loan refinancing. Black neighborhoods were colored red on maps to indicate to appraisers that those neighborhoods were too risky for mortgages.
Although ruled illegal in the Fair Housing Act, housing discrimination occurring today is nothing new. Last month, the Indianapolis Star reported that the value of a Black woman's home shot up by $149,000 when she had her white friend step in for her for an appraisal.
Insider previously reported that Black Americans lag behind white Americans on homeownership, with Black people being denied mortgages at higher rates than white people, even though many are credit-worthy.
Biden's administration has been working to prevent housing discrimination through a series of new rules. Two weeks ago, for example, the Department of Housing and Urban Development's (HUD) Federal Housing Administration (FHA) announced new calculations to determine mortgage assistance that would make it easier for people with student debt to buy a home - especially people of color.
"For people of color, especially Black people, homeownership is wealth," HUD Secretary Marcia Fudge said. "It's not only wealth to us, but it's generational wealth."